The Peace Palace Heats Up Again: But Is Inter-State Arbitration Overtaking the ICJ?

Since the establishment, after World War I, of the Permanent Court of International Justice (PCIJ), judicial settlement by standing international courts has been more popular than inter-State arbitration as a means of settling inter-state disputes (except perhaps in the trade context where the GATT/WTO panels can be characterised as a form of arbitration). However, it may be that inter-state arbitration, is now eclipsing, or, is perhaps now as popular as, judicial settlement, even by the International Court of Justice.  A look at the docket of the ICJ as it currently stands, and at the list of inter-state arbitrations currently being administered by the Permanent Court of Arbitration is very revealing. The PCA now has about as many active inter-state disputes as the ICJ. As far as I can tell, this is the first time that this has happened in the almost century long history of the World Court (the PCIJ and the ICJ).

In 1991, the American international lawyer,  Keith Highet,  who was counsel in many cases before the International Court of Justice, wrote a piece in the American Journal of International Law (Vol. 85, No. 4 (Oct., 1991), pp. 646-654) entitled “The Peace Palace Heats Up: The World Court in Business Again?”. Highet was reporting the dramatic rise in the number of cases submitted to the ICJ in the two years preceding his piece. He began by noting the gloomy forecasts of commentators about the ICJ, in the 1980s, particularly after the Nicaragua case, when it appeared that the Court had lost the confidence of some states. Predicitions about the Court’s demise turned out, happily, to be way of the mark. In just a few years after Nicaragua, Highet was able to write: “the Court in the Hague is busier than it has ever been in its entire history.” (p. 646). He concluded by noting that the Court “has become a ‘hot court’   . . . It is positioned, for the first time in its collective seventy-year history, to become the great international judicial institution that its friends and supporters always knew it could be.”(p. 654)

Today, those same words can be repeated. The Peace Palace again houses a “hot court”. However, this time it is the ICJ’s “relative” and “house-mate”, the Permanent Court of Arbitration (the original inhabitant of the Peace Palace), that is busier than ever and at its peak in terms of the number of cases it is handling. The PCA is fulfilling the role that its creators envisaged for it to a greater extent than at any time over the last century. Over time, the PCA has come to acquire many functions, including administering mixed arbitrations between states and private parties. However, it was envisaged as a forum for inter-state arbitration. Prior to the First World War and prior to the establishment of the Permanent Court of International Justice, the PCA handled a significant number of inter-State arbitrations (17 in its first 15 years of existence between 1899 and 1914. For figures see this speech by the Secretary General of the PCA delivered a year ago). However, that number dropped very sharply indeed after 1914, with the PCA administering very few inter-state arbitrations until the turn of the 21st century. The number is up again and the PCA now has 8 inter-state arbitrations on its list of pending cases.

Comparison of The Number and Diversity of Inter-State Cases at the PCA and ICJ

Although the ICJ’s docket lists 10 cases, the Court has only 8 active case.  Although the Gabčíkovo-Nagymaros Project case(Hungary/Slovakia)  and  the Armed Activities on the Territory of the Congo case (Democratic Republic of the Congo v. Uganda) remain on the list they are both inactive. Final judgment was given in the former in 1998 and in the latter in 2005. The possibility of a further phase of proceedings in either case is rather remote. The PCA’s 8 cases also includes one case where a final award was rendered in December 2013: the Indus Waters Kishenganga Arbitration (Pakistan v. India). So the ICJ may be regarded as still marginally ahead in terms of cases currently being considered.

It is particularly interesting to look at the states that currently have cases before the ICJ and the PCA. It seems that the PCA is currently being utilised by a more diverse group of states than is currently before the ICJ. Four of the ICJ cases (i.e half of the docket of active cases!) involve Nicaragua and two involve Australia. What’s more, there are two cases between Nicaragua and Colombia [Question of the Delimitation of the Continental Shelf beyond 200 nautical miles from the Nicaraguan Coast (Nicaragua v. Colombia) and Alleged Violations of Sovereign Rights and Maritime Spaces in the Caribbean Sea (Nicaragua v. Colombia)]. There are another two between Nicaragua and Costa Rica [Certain Activities carried out by Nicaragua in the Border Area (Costa Rica v. Nicaragua) and Construction of a Road in Costa Rica along the San Juan River (Nicaragua v. Costa Rica)]. These cases between the same parties are related. The two cases between Nicaragua and Costa Rica have in fact been joined by the Court, so one might as well say there are 7 cases before the Court.  In total only 11 states are currently involved in an active case before the ICJ (and this includes New Zealand which intervened in the Whaling Case  (Australia v Japan) where judgment is pending.

Details of two of the inter-state arbitrations currently before the PCA have not been released. This means we have information only about the 6 public cases (including the recently concluded Indus Waters Kishenganga Arbitration). In those 6 arbitrations, India is the only state involved in more than one case. This means there are 11 states in those 6 arbitrations and this does not include the two cases on which there is no public information. More interesting than raw numbers is the geographical spread of parties. 5 of the ICJ’s cases arise from Latin America, two from the Asia- Pacific region and 1 from Europe (the Croatia v Serbia Genocide case to be heard in March).  At the PCA (again leaving out the cases where no public information is available) there are two cases from the Asia-Pacific region [Timor Leste v. Australia; Philippines v China]; two from South Asia [Bay of Bengal Maritime Delimitation (Bangladesh and India); and Indus Waters Kishenganga Arbitration (Pakistan v. India)]; one from Europe (Territorial and Maritime Delimitation between Croatia and Slovenia); and one from the Indian Ocean (Mauritius v. UK). Recently concluded cases at the PCA confirm this diversity. The Ara Libertad case between Argentina and Ghana and the inter-state investment treaty arbitration between Ecuador and the US) broaden the range of states recently appearing at the PCA.

What about diversity of subject matter? Here, perhaps the ICJ has an edge, but if so, only a slight one. Law of the Sea related issues appear to dominate the list of PCA inter-state cases with the Philippines v. China; the Croatia/Slovenia; the Mauritius v. UK and the Bay of Bengal (Bangladesh/India) cases all involving Law of the Sea issues. However, it should be noted that Croatia/Slovenia is not just about maritime delimitation. Also, though the Timor Leste v. Australia case is about a maritime treaty, as pointed out in a previous post, the case is really a law of treaties case and not a law of the sea case.  The recent Ecuador v. US case was an example of that apparently rare occurrence: an inter-state cases arising under an investment treaty. The ICJ’s docket also includes a healthy dose of Law of the Sea but also includes cases relating to genocide and activities around a land boundary; and seizure of documents of one state by another.

What factors might be contributing to the rise of inter-state arbitration?

The preponderance of Law of the Sea cases points to one of the significant factors in PCA cases – thee compulsory jurisdiction system under the 1982 UN Convention on the Law of the Sea (UNCLOS) with arbitration as the default mechanism. Predictably, much of the PCA’s inter-state cases come to it as a result of the invocation of the dispute settlement provisions of UNCLOS. Although UNCLOS cases may also go to the ICJ or to the International Tribunal for the Law of the Sea, the system is tilted in favour of inter-state arbitration and they have been the more popular option.

However, it is interesting to note that other PCA cases arise out of compromissory clauses in other treaties. The Timor Leste v Australia and the Indus Water Kishenganga arbitrations arise out of compromissory clauses in bilateral treaties. In short, the rise in PCA cases is not just about choices states are now making, but mainly relates to choices states make when they decide on which tribunal they wish to include in compromissory clauses.

In deciding whether to provide, in a compromissory clause, for the possibility of arbitration or judicial settlement by the ICJ, parties take into account a range of factors. Procedural flexibility, the ability to dictate the pace of proceedings, the ability to choose the arbitrators, and the ability to keep proceedings confidential are factors that might lead states to choose arbitration. The authority and experience of the ICJ should favour that court. One assumes that cost is a factor. If so, it is not clear to me in which tribunal’s favour that factor will swing. Perhaps towards the ICJ, as the parties to the case do not have to pay for the cost of the institution itself. It would be interesting to see whether numbers of references to the ICJ or to arbitration in compromissory clauses in recent treaties are up or down, relative to each other and relative to historic numbers.

It is striking that that no case currently before the ICJ was submitted by special agreement. Only one of the PCA cases for which information is publicly available was initiated by a special agreement (Croatia/Slovenia Territorial and Maritime Delimitation). There is thus no evidence that, currently, when states are both interested in adjudication of their claims, they prefer one type of tribunal over the other.

Conclusion

When the ICJ delivers it judgment in the Whaling Case (Australia v Japan; New Zealand intervening) as it will probably do soon, the number of active cases at the ICJ will drop below that at the PCA (unless a new case is filed). It remains unclear whether we should expect that trend to continue. However, it does seem likely that current rise of inter-state arbitration will endure for some time, not least because of UNCLOS but perhaps because as more states use the PCA in mixed arbitrations (which are rather numerous), they will become more comfortable in litigating there even in inter-state cases.

Update: On the same day that this piece was posted, the website of the PCA was updated to add another inter-state arbitration.  No information is publicly available about that new case making it the third such case on the PCA’s list of cases and the 9th inter-state arbitration currently administered by the PCA (the Indus Water Kishenganga arbitration included)